Cartilage, a highly specialized connective tissue, contains an extensive extracellular matrix and provides mechanical strength to resist compression in joints. In development, cartilage serves as the template for the growth and development of most bones. Unique ECM molecules, such as type II and X collagens as well as aggrecan and perlecan, are expressed during chondrocyte differentiation in a time- and location-specific manner. Mutations of these genes, as well as regulatory factors, result in impaired cartilage formation and skeletal malformation. Our focus has been on protein factors that regulate chondrocyte differentiation and bone formation to understand the molecular mechanism of their tissue development and diseases. Pannexin 3 and Connexin 43 regulate skeletal formation through their distinct expression patterns and functions: Cell-cell and cell-matrix communication regulates the activation of signaling pathways involved in cell functioning, proliferation, differentiation and death. Gap junction proteins play important roles in such cellular communication. There are two gap junction families in vertebrates: the connexins (Cxs), containing more than 20 members, and the recently identified pannexins (Panxs) (Baranova et al., 2004). The Panx family consists of three members, Panx1, 2, and 3. Previously, we showed that Panx3 is expressed in the transition stage between proliferation and differentiation of chondrocyte and osteoblast progenitors. Unlike Cxs, Panx3 functions as a unique endoplasmic reticulum (ER) Ca++ channel in addition to its gap junction and hemichannel roles. We found that Panx3 inhibits proliferation of these progenitor cells, while it promotes differentiation. Pannexin 3 (Panx3) and connexin 43 (Cx43) are two major gap junction proteins expressed in osteoblasts. We studied their functional relationships in skeletal formation by generating Panx3-/- KO mice and Panx3-/-; Cx43-/- double KO mice and comparing their skeletal phenotypes with Cx43-/- KO mice. Panx3-/- KO mice displayed defects in endochondral and intramembranous ossification, resulting in severe dwarfism and reduced bone density. The skeletal abnormalities of Panx3-/-; Cx43-/- double KO mice were similar to those in Panx3-/- KO mice. The gross appearance of newborn Cx43-/- KO skeletons showed no obvious abnormalities except for less mineralization of the skull. In Panx3-/- KO mice, proliferation of chondrocytes and osteoblasts increased and differentiation of these cells was inhibited. Panx3 promoted expression of osteogenic genes such as ALP, osteocalcin (Ocn), and Cx43 by regulating the expression of osterix (Osx/Sp7), an essential transcription factor for bone formation. Panx3 was induced in the early differentiation stage and reduced in the maturation stage of osteoblasts when Cx43 expression increased for mineralization. Furthermore, only Panx3 functioned as an ER Ca2+ channel to promote differentiation, and it could rescue mineralization defects in Cx43-/- KO calvarial cells. Our findings revealed that Panx3 and Cx43 have distinct functions in skeletal formation. The role of Panx3 in proliferation and differentiation of odontoblasts: In tooth development, the expression of Panx3 was predominately localized in preodontoblasts that arise from dental papilla cells and can differentiate into dentin-secreting odontoblasts. Panx3 was also co-localized with p21, a cyclin-dependent kinase inhibitor protein, in preodontoblasts. Panx3 was expressed in primary dental mesenchymal cells and in the mDP dental mesenchymal cell line. Both Panx3 and p21 were induced during the differentiation of mDP cells. Overexpression of Panx3 in mDP cells reduced cell proliferation via up-regulation of p21 and promoted the BMP2-induced phosphorylation of Smad1/5/8 and the expression of dentin sialophosphoprotein (Dspp), a marker of differentiated odontoblasts. Furthermore, Panx3 released intracellular ATP into the extracellular space through its hemichannel and induced the phosphorylation of AMP-activated protein kinase (AMPK). 5-Aminoimidazole-4-carboxamide-ribonucleoside (AICAR), an activator of AMPK, reduced mDP cell proliferation and induced p21 expression. Conversely, knockdown of endogenous Panx3 by siRNA inhibited AMPK phosphorylation, p21 expression, and the phosphorylation of Smad1/5/8 even in the presence of BMP2. Taken together, our results suggest that Panx3 modulates intracellular ATP levels, resulting in the inhibition of odontoblast proliferation through the AMPK/p21 signaling pathway and promotion of cell differentiation by the BMP/Smad signaling pathway.